Delaware Business Litigation Report

A Roadmap to the Delaware Rapid Arbitration Act - A Webinar Presentation On June 24, 2015

Join us for a webinar on the new DRAA.

June 24, 2015 12:00 PM - 1:00 PM EST

The enactment of the Delaware Rapid Arbitration Act (the "DRAA") is a breakthrough in the quest for an efficient, cost-effective and timely process to resolve business disputes,  This webinar explains how the DRAA differs from traditional arbitration by providing a fast resolution that avoids the expense of extensive pre-hearing discovery, disputes over arbitration solution and multiple appeals. More ›

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Chancery Court Expands on When Legal Fees Can Be Advanced

Advancement and indemnification rights provide directors and officers of Delaware corporations comfort when accepting positions that often lead to being named in litigation. However, once the interests of the executive and the company diverge, advancement rights can become a hotly contested issue. In dealing with advancement and indemnification claims, the Court of Chancery will analyze a company's bylaws and charter to determine to what extent that company has contracted with its executives to advance and indemnify legal fees. Many Delaware corporations, like Echo Therapeutics Inc. in the matter discussed herein, have bylaws and charters that allow for advancement and indemnification "to the full extent not prohibited under Delaware law." It is within that broad scope that decisions from the Court of Chancery, like the one authored in this case, guide practitioners in crafting arguments both for and against the advancement of legal fees. More ›

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CorpCast Episode 7: Better Know a Judge: the Honorable Mary M. Johnston of the Delaware Superior Court

In our second installment of “Better Know a Judge,” we welcome the Honorable Mary M. Johnston of the Delaware Superior Court in New Castle County.  Judge Johnston, who is a member of the Superior Court’s Complex Commercial Litigation (“CCLD”) panel, explains how the CCLD track can benefit litigants seeking swift and comprehensive resolutions to their business disputes.  In addition, Judge Johnston shares important lessons learned over the course of her career, as well as her advice for attorneys appearing before her and in the Superior Court.  Our thanks to Judge Johnston for joining us as a guest on the podcast! More ›

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CorpCast Episode 6: A Brief Introduction to the Delaware Rapid Arbitration Act

On May 2, 2015, the Delaware Rapid Arbitration Act (the “DRAA”) became effective.  The DRAA is the second attempt by the State of Delaware to create a state-sponsored voluntary arbitration process.  In Episode 6, we sit down with Joe Slights, a former judge with the Delaware Superior Court, to discuss Delaware’s prior attempt to create a state-sponsored arbitration process, what happened to that scheme, and how the DRAA differs from the prior statute.  We’ll also talk about how the DRAA addresses some of the problems present in private arbitration rules and procedures, as well as other benefits of the DRAA to parties seeking an alternative forum to resolve their disputes. More ›

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'Cornerstone' Decision Reinforces Del. Corporate Law Bedrock Principles

Delaware law has long provided that the decisions of disinterested and independent directors who receive no special benefit from a transaction ought not be the basis of personal liability in monetary damages. To subject directors who are independent of interested parties and who themselves receive no benefit in a transaction not otherwise shared with public stockholders would discourage quality individuals from serving on boards or committees of Delaware corporations and likely also reduce appropriate risk-taking. Nonetheless, the courts since two Delaware Supreme Court decisions in Emerald Partners v. Berlin, 726 A.2d 1215 (Del. 1999), in 1999 (Emerald I) and 2001, 787 A.2d 85 (Del. 2001) (Emerald II), often denied motions to dismiss brought by disinterested and independent directors if a plaintiff could plead facts sufficient to invoke the entire fairness standard of review. More ›

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Court Of Chancery Orders Dissolution Despite LLC Agreement Bar

Meyer Natural Foods LLC v. Duff, C.A. 9703-VCN (June 4, 2015)

This decision may answer the question of whether an LLC Agreement’s bar of dissolution without a member’s consent trumps the statutory remedy of court-ordered dissolution when the entity’s purpose cannot be achieved any longer. It concludes that dissolution is proper under the facts presented where the objecting member really had no good reason to object.

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Court Of Chancery Again Limits Covenant Claims

Akzo Nobel Coatings Inc. v. The Dow Chemical Company, C.A. No. 8666-VCP (June 5, 2015)

This is yet another decision declining to uphold a claim based on the covenant  to deal in good faith and fairly. More ›

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Court Of Chancery Explains Recent Fee Award Ranges

In Re Jefferies Group Inc. Shareholders Litigation, C.A. No. 8059-CB (June 5, 2015)

This is an important decision for several reasons. More ›

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R. Eric Hacker Joins Morris James LLP’s Real Estate and Business Litigation Practices

Morris James LLP is pleased to announce that R. Eric Hacker has joined the firm’s Georgetown office as an associate in its Real Estate and Business Litigation practice groups. His practice will focus on residential and commercial real estate, and commercial litigation. More ›

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Proxy Puts: Consider With Caution

Directors of a Delaware corporation that enters into a financing agreement with a lender may breach their fiduciary duties if the financing agreement contains a common provision allowing the lender to accelerate and demand full payment of the indebtedness upon a substantial change in the composition of the board of directors. Moreover, the lender may be liable for aiding and abetting the directors' breach of fiduciary duty. Vice Chancellor J. Travis Laster's transcript ruling in Pontiac General Employees Retirement Fund v. Healthways, C.A. No. 9789-VCL transcript (Del. Ch. Nov. 3, 2014), denied the motions of the defendant directors and the lender to dismiss claims based on similar facts and allowed the action to proceed. The ruling and accompanying reasoning severely constrict the permissible use of the so-called "proxy put" often contained in corporate financing agreements. More ›

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Court Of Chancery Defers To Arbitrator

In re Knowledge Crossing LLC, C.A.10383-VCG (May 29, 2015)

It is now established that a pending arbitration qualifies for purposes of applying Delaware’s law on when to stay a case in favor of a prior proceeding. This decision extends that law to enter a stay to let the arbitrator decide if he is going to deal with the issues in the later-filed Delaware case.

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Court Of Chancery Upholds Cash Calls To Eliminate Minority Owner

CanCan Development LLC v. Manno, C.A. 6429-VCL (May 27, 2015)

This is a great decision on how to get rid of a minority owner in an LLC when she is disruptive. More ›

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Court of Chancery Upholds Right To Secondary Offering

In Re Molycorp Inc. Shareholder Derivative Litigation, C.A. 7282-VCN  (May 27, 2015)

When investors bargain for the right to have their stock sold in a secondary offering after the company goes public, fiduciary duties normally do not operate to restrict that right. More ›

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Court Of Chancery Limits Conditional Advancement Contracts

Blankenship v. Alpha Appalachia Holdings Inc., C.A. 10610-CB (May 28, 2015)

Corporations continue to regret conferring broad advancement rights on their former directors. This is yet another example of an effort to get out of that obligation. More ›

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Court Of Chancery Confirms Jurisdiction Over Escrows

East Balt LLC v. East Balt US LLC, C.A. 10462-VCN (May 28, 2015)

There are often disputes over funds held in escrow under earn out or indemnification provisions in various deals. This decision confirms that the Court of Chancery will take jurisdiction over a suit seeking specific performance of the distribution provision of the escrow agreement. This seems particularly desirable because that Court has the most experience with why such escrows are put in place and has resolved many such disputes in the past.

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